In Queensland, an entity must hold a QBCC licence to carry out building work of $3,300 or more, pursuant to section 42 of the Queensland Building and Construction Commission Act 1991 (QBCC Act). Carrying out building work is broadly defined and includes providing administration, advisory, management or supervisory services for building work. The maximum penalties for contravening section 42 are $46,707 for individuals and $233,537 for companies, and more importantly, an entity cannot claim any monetary or other consideration for the building work carried out without a licence.
Since late 2013, there has been an exemption to allow an entity to carry out building work in Queensland without a QBCC licence, provided all building work is subcontracted to appropriately licensed subcontractors in accordance with section 8, Schedule 1A of the QBCC Act (the Head Contractor Exemption).
The change
The Queensland Government has passed the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Bill 2020 to amend the QBCC Act. The Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 (Amendment Act) received assent on 23 July 2020.
The Amendment Act will remove the Head Contractor Exemption, due to the Government's concern that the QBCC cannot direct unlicensed entities to rectify defective building work or pursue unlicensed entities for conduct that licensed entities are otherwise prohibited from engaging in.
When does it commence?
While some of the provisions in the Amendment Act will commence on 1 October 2020, the amendment to remove the Head Contractor Exemption will commence on a date yet to be proclaimed. The Government has not announced any transitional arrangements.
The significance
A number of head contractors and developers, having no intention to carry out building work themselves, have been taking advantage of the Head Contractor Exemption and carrying out building work without a QBCC licence. Some foreign entities who otherwise do not qualify for a QBCC licence have been taking advantage of this exemption as well.
Once the amendment to remove the Head Contractor Exemption commences, those head contractors and developers will need to hold a QBCC licence to carry out building work, unless they otherwise qualify for other exemptions, e.g., exemptions in respect of entities carrying out building work for prescribed government projects (prescribed project involving building work carried out for a government entity) or special purpose vehicles carrying out building work under a public-private partnership.
QBCC may take strong enforcement actions against entities carrying out building work without a QBCC licence, given the concerns of the Government and the industry in light of a spate of incidents in recent years.
If you would like to understand how the Amendment Act will impact your business please contact Michael Creedon.
